Introduction
Forex charts might look overwhelming at first. So many lines, colors, and price swings.
But once you learn how to read forex charts, it becomes your most powerful trading tool. In this guide, we’ll break down candlestick charts, explain how to read trends, and help you spot profitable setups.
1. Types of Forex Charts
There are 3 main chart types:
- Line Chart – Simple closing prices
- Bar Chart – Shows open, high, low, close (OHLC)
- Candlestick Chart – Most popular and useful
We’ll focus on candlestick charts, which show the same OHLC data but with visual clarity.
2. Anatomy of a Candlestick
A single candlestick represents price movement within a time period (e.g., 1 hour, 1 day)
- Body: Range between open and close
- Wicks/Shadows: High and low of that candle
- Colors:
- Green (bullish) = close > open
- Red (bearish) = close < open
📌 Tip: You can change colors and timeframes on platforms like TradingView or MetaTrader.
3. Timeframes and How They Work
Each candlestick forms over a specific period:
- 1 Minute (M1) – for scalpers
- 15 Min (M15) – for intraday
- 1 Hour (H1) – for swing entries
- 1 Day (D1) – for big picture
Beginners should use H1 to D1 to avoid noise.
4. Identifying Trends on Charts
Look at the sequence of candles:
- Uptrend: Higher Highs (HH) + Higher Lows (HL)
- Downtrend: Lower Highs (LH) + Lower Lows (LL)
- Sideways/Range: Horizontal price action
Use tools like:
- Trendlines
- Moving Averages (EMA 50/200)
- Support & Resistance zones
5. Basic Candlestick Patterns You Must Know
| Pattern | Signal | What it Means |
|---|---|---|
| Doji | Reversal | Indecision in market |
| Engulfing | Strong | One candle “engulfs” previous |
| Pin Bar | Reversal | Long wick = rejection |
| Inside Bar | Neutral | Consolidation before breakout |
✅ Learn to spot these on key levels (support/resistance)
6. Combining Candlesticks with Market Structure
- Don’t trade a pattern in isolation
- Check if it aligns with:
- Overall trend
- Key level (support/resistance)
- Structure shift (BOS, CHOCH)
Example:
Engulfing candle + Break of Structure = strong entry
7. Tools to Practice Chart Reading
- TradingView Replay Mode – Go back and “re-watch” market history
- MetaTrader Demo – Practice in live charts
- Notebook/Notion Template – Screenshot, label, learn
- Backtesting Journals
Consistency beats prediction.
